PLACE MATTERS Innovation & growth in the UK 03 FOREWORD We commissioned this report at a crucial moment for the UK. With a new This report is addressed both to local and civic leaders, and to central Government and Prime Minister, and as we exited the EU, we knew this was Government and its institutions who lead on innovation policy. It is about how we the right time to focus on innovation in our economy. Over the last decade, begin to improve the UK’s innovation performance from the ground up. To local productivity growth in the UK has lagged behind other countries, and the gap Government, businesses and institutions in places, we ask that you take a hard between our cities and the innovation hubs of the rest of the world has grown. look at where you currently are and what you want to achieve in innovation, using This report argues this is due to a failure to balance innovative activity across the the checklist of recommendations to start. country, even as our science base has remained globally leading. Many of our cities led the global economy’s first modern leap in productivity – they should Our new Government has made clear that its priority is the levelling up of all parts participate in the next. It is a timely diagnosis of where innovation is flourishing, of our economy: this will be impossible without a better distribution of innovation. where it is being held back, and presents the beginnings of a plan to unleash it. Business-as-usual is not good enough, and if we repeat what we have done in the past, the potential of our places will remain untapped. The Government must The world has changed a lot in the last few months. The country is facing an begin by reviewing our innovation infrastructure, returning to experts to investigate unprecedented threat to life and livelihood, and the emergency social distancing the border between research and commerce. We need to understand how measures enacted to prevent the spread of COVID-19 have suspended the research is translated into products and services in close detail, learning from economy. If innovation, in plain terms, is the successful adaptation to changing other countries to build a truly national innovation infrastructure. circumstances, then this crisis has made it even more important than it was three months ago. Businesses across the country must innovate simply to return We are balanced on a pivot, and the direction in which we tilt depends on the to work – the economic challenge has grown. We are convinced that we can actions we all take in the next weeks or months. As we emerge from the current emerge stronger from this crisis – industry has responded to the Government’s crisis, we will face uncertainty and recession, and must adapt our behaviour to call to increase testing and both business and public services have accelerated new constraints. Although the challenges are serious, there is an opportunity now digitalisation – but not without creative thinking and bold action. It is a fine to empower our businesses to innovate and for Government to invest in long-term example of how corporate Britain can, and has, reacted to a global crisis. This transformation that will support them to do so. We can do things differently, but we innovative response to COVID-19 perhaps shines a light on how we as a country need the courage to start and the conviction to follow through. could respond to the longer-term challenge of climate change. Bruntwood SciTech was formed by Bruntwood and Legal and General to build the innovation districts that technology-focused businesses need to grow. But this is only part of what we do: the right accommodation alone will not help businesses create new products or find novel solutions to our problems. Innovation districts are located within innovation ecosystems, which are themselves located within place ecosystems, each with unique characteristics and dynamics. Each needs to function for the businesses in our districts to do productive and innovative Phil Kemp work. It is why so much of what we do is about connecting our districts to Chief Executive, Bruntwood SciTech place, encouraging interaction between our tenants and the city, and helping them contribute to urban life, and what we will demonstrate through our major investments in Liverpool and Oxford, working with Government, universities and businesses to increase innovative activity in both cities. 05 CONTENTS EXECUTIVE SUMMARY 05. Executive Summary This is a report that is fundamentally about place. We believe that many of our cities and towns have or have had a key role in the creation of the innovation- 10. Chapter 1: The Role of Productivity in a Modern Economy based global knowledge economy. Some places are already innovation rich and others have the potential to drive the innovation which is now essential to the future well-being of the British economy. The purpose of this report is to 18. Chapter 2: Innovation, Growth and Place – Then and Now help more cities understand the importance of innovation activity to drive their economies forward and close the productivity gap. 31. Chapter 3: Place and Policy, National and Local The report has been written not for innovation experts, but for civic leaders, partners in Local Enterprise Partnerships and their like across the country. It 44. Chapter 4: The Conditions Needed for Innovation to has been written at an important moment in our country’s history, as COVID-19 Thrive in our Cities has taken its toll, claiming the lives of thousands of Britons, virtually closing our economy and, in so doing, changing all of our lives in ways we cannot yet fully 62. Chapter 5: Checklist for places understand. This is a period of change in other ways too. The global pandemic took hold shortly after the election of a new British Government, committed perhaps more volubly than any before it to the objective of levelling up the 64. Chapter 6: Recommendations economic fortunes of different parts of our country. Innovation is fundamental to both tackling the pandemic and to the cause of levelling up. A well-functioning health and innovation economy can save lives and generate economic well-being, written through our economy like letters through Blackpool rock. In some places, over recent months, the frenetic search for solutions to the pandemic have mobilised legions of the world’s finest researchers and technologists. In others, industry leaders have sought to adapt their companies to produce much needed resource for the health and care services. Yet in other places, including many that have proud innovative and industrial track records, there has been less capacity to act and to respond. Our cities and towns are sharply different places from each other, both now and from what they have been in the past. This is about how we can change this for the better. Our debates on place over recent years have, at times, recognised these differences but have too often pitched cities against towns, north against south and, at its most populist, migrants against those born in Britain. In play have been debates about whether the market or the state should determine spatial outcomes and what the balance should be as to the role of each. We examine all these issues in this report in the search for answers about what to do to promote widespread, successful, place-based innovation. We advocate that, alongside a continuing focus on global pre-eminence in fundamental scientific enquiry, we need an even stronger focus on ensuring the distribution of this excellence across the country. Making scientific excellence sustainable in the long term, in places outside our traditional research centres, should translate into the productivity growth we need. IMAGE?? 07 We advocate the development of innovation districts in places throughout the Chapter Three examines innovation policy, considering how it might have had country and issue a plea that these must be genuinely based on the strengths and limited effectiveness. Innovation policy is an area in which there has been much potential of each place. Innovation must be seen in the context of place-based debate over recent years, not only in this country but globally. Learning from how development. We must be realistic about each place; future innovation potential innovation policy has adapted over the years in the UK and how it has played is highly likely to be based on its economic foundation, not on an externally out in practice needs to guide any future approach to policy. We focus on the imposed vision, however well-funded it may be. key issue of translational activity (between the creation of knowledge and its adoption in the economy). Our conclusion is that too often innovation policy has We strongly endorse the now often used notion of an innovation ecosystem appeared to have been spatially blind and in doing so, limited in its effectiveness. as a central element of growing innovation in place. As in natural ecosystems, This has contributed to both larger-than-justified imbalances and lower than vulnerable young firms need the right conditions to germinate, survive and grow: desired economic benefit. Where regional and other bodies have sought to create a supply of capital, talent, premises, and support helps these firms as they mature. economic success through innovation, often through clusters, the consequential Our focus is on the steps needed for places to be more absorptive of innovative impact has been much lower than expected. This needs to change if levelling up is potential, on how we improve the ability of more places in the UK to absorb and to be delivered.